What’s In Your Rent? A New Initiative Attempts To Answer That

After five years of rapidly escalating rents, many Seattle tenants are familiar with the classic landlord letter, “Due to additional taxes and labor costs, your rent is going up a bazillion percent.” If a new initiative is successful, landlords will be required to accurately indicate their costs in relation to when they send out these rent hikes.

Property owners or landlords must provide to renters, in writing, a breakdown of costs included in the price of rent. These include, but are not limited to: actual cost per unit for base rent, mortgage, insurance, property taxes, rental property registration fees, costs/fees associated with maintenance, and operations.

This requirement would apply to nearly all commercially run properties and take effect within 120 days of the initiative passing. Landlords would provide cost breakdowns when they hike rents and whenever a lease is signed. Additionally, reporting would be delivered to the city every five years.

The Campaign Background And Signature Drive

Devin Silvernail is the volunteer running the campaign. His full time job is with Be:Seattle, the nonprofit behind The Pledge, an effort similar to safe spaces. The Pledge encourages socially conscious businesses post that their amenities, such as bathrooms, can be used by people who them. Be:Seattle is also helping to run Tenant Rights Bootcamps which educate tenants about the law. Silvernail dove into the initiative campaign because he believes that rent transparency will help everyone. In fact, it appears that the measure is very popular. He says:

95% or more people are on board with it. And that’s renters, homeowners, we’ve talked to property managers, we’ve talked to landlords that are on board with it too. Especially the property managers have been saying, ‘yeah, no skin off my back.’ It makes sense. It seems reasonable. People just want to know.

The campaign needs to collect 20,638 valid signatures and the final deadline to submit is September 12th. However, the group is trying to get everything done by early July. Once the signatures are submitted, the city council can pass the measure as-is, pass it with minor amendments, or send it to the voters. If the signatures are submitted in early July, it would appear on the November ballot. A September submission would put it on a special election or Silvernail was very positive about the progress. “We are really kicking ass,” Silvernail said. “And as the weather gets better it’s only going to get better”

Uses For The Data

Devin is hopeful that the information will help guide policy. Right now the city doesn’t have an internal method to track rent trends and relies on private data, primarily from Dupre + Scott. The private data depends on surveys and is most robust with larger apartment buildings.

At this point though, it’s impossible to say how the data will be used and that might be a good thing. Since it would make the data public, people may find unexpected but beneficial uses. The landlord lobby, the Rental Housing Association of Washington (RHAWA), isn’t as optimistic, calling the effort “dumb” (and Seattle’s local lobbyist for developers piled on). The RHAWA has a record of heavy lobbying and lawsuits to stop nearly every effort to provide tenant protections, including laws that would stop discrimination directly leading to displacement. RHAWA’s official statement, as reported by Curbed Seattle, doesn’t really attack the specific initiative, instead suggesting it is only bad because it would lead to other, bad legislation.

The initiative “piles on to the ‘death by a thousand cuts’ strategy Seattle has pursued against small landlords, and would further reduce Seattle’s affordable housing stock as small landlords choose to sell to owner-occupants or developers building new, luxury housing.”

The statement continued, “How is it useful for a renter to know that a landlord, while generating revenue, was building a cash reserve to fund a roof replacement or similar capital expense? What next, a breakdown of all expenses that go into producing a bottle of shampoo, a box of cereal, or a cup of coffee?”

Silvernail took issue with efforts to conflate the initiative with other issues. “It’s just really about transparency. And in the long run, giving the city, for the first time ever, a way to track rent trends without contracting with an outside company.” He sees the initiative as “another block in the mosaic of tenants rights” and believes better information will produce better policy.

Judging by the enthusiasm Silvernail’s encountered while talking to people, most folks may agree with him. If so, you may be seeing this initiative on your ballot very soon.

If you found this article useful, read The Urbanist often or generally support our work, please consider making a donation. The Urbanist is a 501(c)4 nonprofit and our work is mostly fueled by donations.

Owen does servicing and consulting for a software company to pay the bills. He has an amateur interest in urban policy, focusing on housing. His primary mode is a bicycle but isn't ashamed of riding down the hill and taking the bus back up. Feel free to tweet at him: @pickovven.

Pablo96

Fortunately this will be viewed as too intrusive into private business operations. Sorry, if I want to make 8-10% on my SFR rental, I can, and I will. If the city and state of WA want to nickel and dime small-time landlords, the costs get passed on. Raise my property tax 60% in 2 years? Who’s gonna pay for the increase? Yup…..

Andre Tsang

Sure, but then nobody will rent your place. Rent is determined by 2 things – supply & demand. Property tax has no bearing on either.

nobody_special

This whole idea relies on the misconception that there’s some sort of direct relationship between rents and the underlying costs to landlords. Each apartment rents for what it does because that’s what people are willing to pay for an apartment of that size in that general location.

The relationship between rents and costs definitely plays into decisions land owners make about whether or not to build more apartments. For existing apartments, the price is set by the market, not by the costs.

RHAWA

Owen,

We’d be happy to offer you comments directly, versus taking comments from other media and assuming what our position is on the initiative. If you’d like a clarifying statement on the initiative itself, see below.

The bottom line is that this proposal does nothing to address affordability issues in the city, and actually adds additional administrative costs that will only further increase rents. Requiring landlords to open their private financial books for renters solves what, exactly?

Increasingly burdening small, independent landlords – who are least able to understand the complicated network of Seattle rental laws, but most likely to offer units at affordable rents – with another layer of regulations is going to significantly harm the rental market. These landlords are already selling their units, we hear this daily, and when those units are sold they’re lost from the rental market forever as owner-occupied housing, or are razed in favor of new construction.

The intent of the initiative is not transparency. It is to intentionally drive a wedge between renters and landlords, and to publicly shame landlords who earn money on an investment which they’ve poured thousands of dollars and hours in to over many years. I-127 is also plainly a vehicle for the the city to create a rental database which will be used as a means to attempt enacting forms of rent control.

RHAWA opposes the initiative.

Sean Martin,
External Affairs Director, RHAWA

M.C.

I have not found detailed descriptions of what a landlord must include in their cost analysis, but if landlord’s time can be valuated at the going handyman rate of, say, $30/hour (which would be fairly low), I can easily imagine renters being surprised at how LITTLE their landlord clears. For tax returns, a property owner’s time can not be included as a deduction, but neither can principle payments on their mortgage. Secondly, I have also not seen anything to say that a landlord is not allowed to raise rent anyway. I would be legal to say that my taxes have gone up $200/month, but I’m raising the rent $500/month just because I feel like it or because I have spent so much more time dealing with requests from a high-maintenance tenant. If other units are similarly priced, the tenant can’t do much about it. And if they are lower, then the landlord would learn from supply and demand that they shouldn’t raise prices that much. But this would happen anyway without being required to share this information. It’s a pointless, potentially very harmful law.

DM Wright

Looks like somebody skipped macroeconomics in college. A landlord’s costs have nothing to do with the amount charged for a rental unit. It’s all based on supply and demand. If you and I sign a lease, and we agree on the rent cost, we’re done. My costs have nothing to do with that equation. Skyrocketing rents have to do with limited supply. Due to the topography and physical characteristics of the Puget Sound area, you have a relatively constrained supply of available land to build more housing. Seattle could go vertical like Hong Kong (they’re trying), but there’s a whole lot more infrastructure that would be needed. So, until supply outpaces demand, rents will continue to escalate, and we landlords will reap the benefit. It’s a risk and reward thing. Anyone is free to go buy a rental property and join the fun.

Donate

The Urbanist is a 501(c)4 nonprofit. We largely depend on donations to handle our ongoing costs. Monthly donations are greatly apprecated from regular readers.

Instagram

The Urbanist was founded in early 2014 in order to examine and influence urban policies. We believe cities provide unique opportunities for addressing many of the most challenging social, environmental, and economic problems. We serve as a resource for promoting and disseminating ideas, creating community, increasing political participation, and improving the places we live.

Join us each month in Downtown Seattle for a social gathering to talk about urban issues and hear from local thought leaders.